Kiwi eye post COVID19 high as safe haven demand falters

Daily Currency Update

The New Zealand dollar crept higher through trade on Wednesday, testing a break above 0.6580/0.66. Broad based US dollar weakness and a sustained run in risk demand helped drive the NZD to intraday highs at 0.6579. While risk demand continues to drive upward momentum the NZD found support in an uptick of Fonterra’s 2020/21 milk price futures. NZX milk futures pushed through $7 before edging lower into this morning’s open, supporting strong gains in this weeks Global Diary Trade auction and brightening the outlook for a key export. While the surge in futures did little to add to the upturn, the improvement in milk prices and the broader export outlook has reinforced supports at 0.64/0.6380 while opening the door to a run above current post COVID19 highs.
Risk demand continues to drive direction as markets weigh the positives of re-opening economies against the shadow of rising COVID19 infection rates. With a swift rebound in economic activity through the latter half of 2002 looking increasingly unlikely topside gains will remain hard won. Without a renewed surge in risk appetite we anticipate the NZD will continue to bounce between support at 0.65380 and resistance at 0.66/06620.